The central bank extended the moratorium period for the repayment of loans by another three months till August 31, 2020.

The steps announced by the Reserve Bank of India including reduction in repo rate and extension of moratorium on term loans for another three months will help in quick revival of the economy, State Bank of India chairman Rajnish Kumar said.

The RBI on Friday slashed repo rate by 40 basis points to 4 per cent.

The central bank extended the moratorium period for the repayment of loans by another three months till August 31, 2020, and also increased bank exposure to corporates to 30 per cent of the group’s net worth from the current limit of 25 per cent.

“The entire effort of the government and the RBI is to revive the growth in the economy and at the same time recognising the difficulties that industries are facing. All the measures around reduction in repo rate, moratorium and increase in the limit on group exposures will be helpful in revival of the economy,” Kumar told reporters through a video call on Friday.

The measures are a calibrated response to the situation which is emerging on account to the disruptions caused due to COVID-19, he said.

Kumar said, so far, 20 per cent of the SBI borrowers have opted for the three-month moratorium.

He said the extension of moratorium on repayment of loans will be helpful to the industry.

Also, with the extension of moratorium, there is no urgent need for a dispensation from the RBI.

“Right now, the moratorium will take care of the situation around the cash flow disruptions. I would not be obsessed with one-time restructuring at this particular point of time when we have time till August 31,” he said.

Kumar, however, said banks can still go for restructuring of stressed accounts, if required, as per the June 7 circular of RBI.

When asked about extending moratorium to NBFCs and housing finance companies, Kumar said that it would be given on a case to case basis.

“We would decide on a case to case basis. We will have to look at their (NBFCs/HFCs) cash flows and take a decision,” he said.

“SBI will take a decision on reduction in deposit and lending rates post the ALCO meet,” Kumar said.